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Trucking Raises Concern About Cost of Cap-and-Trade

July 14, 2009

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The effort to create a cap-and-trade system to limit carbon emissions is generating more questions than answers right now, including whether or not Congress will be able to actually pass a bill.
One thing is sure, though. If a bill does pass, diesel fuel will become more expensive, and that was a key issue during a Senate hearing yesterday.

Of course, that's the whole idea: Raise the cost of carbon-based energy to encourage investment in cleaner energy and promote more efficient use of energy, with the long-term objective of slowing global warming and decreasing U.S. dependence on foreign oil.

There are a host of arguments for and against this idea, all of which are being debated at length on Capitol Hill as Congress considers climate change legislation. But the possibility of a steep jump in diesel prices is first on trucking's list of concerns.

At a hearing before the Senate Environment and Public Works Committee yesterday, American Trucking Associations spokesman Ray Kuntz, Chairman and CEO of Watkins and Shepard Trucking, warned that the fuel cost increases arising from a cap-and-trade program would harm the industry and ripple through the economy.

Petroleum suppliers have said diesel fuel could go up as much as 88 cents a gallon under the cap-and-trade bill recently passed by the House, Kuntz said.

"Constraining the country's freight delivery system would change our way of life for the worse by significantly increasing the cost of everything we buy," said Kuntz.

The industry supports efforts to reduce greenhouse gas emissions and improve fuel efficiency, he added. Watkins and Shepard, for example, has reduced fuel consumption by 14 percent over the past two years by limiting speed to below 65 mph, using idling reduction technology, rolling on fuel efficient tires and training drivers to be fuel conscious.

"It's very simple," Kuntz said. "We reduce our fuel consumption, we reduce our cost and we reduce our carbon output. But here's our challenge: we don't build engines, we don't refine fuel, but we do pay the price of any increased fuel cost due to climate change legislation."

The chairman of the panel, Sen. Barbara Boxer, D-Calif., said the committee is working with the House bill as a starting point and will draft its own legislation. She supports the cap-and-trade approach, and challenged the prediction of steep increases in fuel prices.

For in-depth coverage of climate change legislation, see the August issue of Heavy Duty Trucking.

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